InterMune Inc.’s third-quarter adjusted loss per share of 62 cents was a penny narrower than the year-ago loss. The third-quarter loss was also narrower than the Zacks Consensus Estimate of a loss of 71 cents. The narrower loss was due to higher revenues, partially mitigated by higher expenses.
InterMune reported revenues of $19.7 million in the third quarter of 2013, compared with year-ago revenues of $7.5 million. Revenues also increased 37% on a sequential basis.
The sharp increase in total revenues was primarily due to a boost in Esbriet (pirfenidone) sales. The drug was launched in Germany in Sep 2011. Revenues were also above the Zacks Consensus Estimate of $16 million. The company expects fourth quarter 2013 revenues to surpass the third quarter figure.
Esbriet was the sole contributor to InterMune’s revenues in the third quarter of 2013. Esbriet is approved for the treatment of idiopathic pulmonary fibrosis (IPF), a fatal lung disease.
During the quarter, research and development (R&D) expenses increased 4.4% to $27.3 million. The increase in R&D was due to expenses associated with the ASCEND trial and also the RECAP open-label extension study.
The ASCEND trial will support the filing of Esbriet for the treatment of IPF in the U.S. In Jan 2013, the company completed enrollment for the phase III study in the U.S. InterMune confirmed in its press release that top-line results from the ASCEND trial are expected in the second quarter of 2014.
Selling general and administrative (SG&A) expenses were up 48.3% to $35.2 million during the reported quarter. The increase in SG&A expenses during the reported quarter was primarily attributable to expenses related to pre-launch and subsequently launch of Esbriet in the EU and Canada.
Apart from announcing its results, the company updated its previously announced guidance for the year 2013. InterMune now expects Esbriet sales in the range of $60−$70 million (previous: $55−$70 million) in 2013. The Zacks Consensus Estimate for 2013 total revenues of $62 million is on the lower end of the guidance range.
The company expects 2013 operating expenses towards the lower end of its previous guidance range of $245–$285 million. InterMune expects 2013 R&D expenses in the middle of its previous guidance range of $100–$120 million. Meanwhile, 2013 SG&A expenses are expected towards the lower end of the company’s previous guidance range of $145–$165 million.
To date, Esbriet has been successfully launched in 13 European countries, namely, Austria, Belgium, Denmark, France, Germany, Iceland, Luxembourg, Norway, Sweden, Finland, Italy, England and Ireland. The company expects to provide an update on pricing and reimbursement discussions in Spain and the Netherlands by the first half of next year.
Though Esbriet is the only approved medicine for IPF, companies like Novartis (NVS - Analyst Report) and Sanofi (SNY - Analyst Report) are developing therapies to treat IPF. We remain concerned about the fact that InterMune is dependent on a single product for growth. We expect investor focus to remain on the pricing and reimbursement in the remaining EU countries.
InterMune presently carries a Zacks Rank #2 (Buy). Stocks such as Actelion Ltd. (ALIOF - Snapshot Report) currently look more attractive with a Zacks Rank #1 (Strong Buy).